Kenanga Shariah Balanced Fund Report - January 2018

Transcription

1. January 2018 Market Review and Outlook Mixed Assets Market Review As widely expected , the Federal Reserve raised interest rate by 0.25%, marking the third rate hike for 2017. The Fed continues to guide for three more rate increases in 2018 as Janet Yellen prepares to hand over the chair to Jerome Powell in 2018. China’s central bank later followed suit by raising interest rates for its reverse repos and medium-term lending facility (MLF) loans by 5bps to curb capital outflows. On 22 December, US President Donald Trump signed into law the most sweeping overhaul of the US tax code in 31 years. The bill lowers the top individual tax rate from 40% to 37% and slashes the corporate tax rate from 35% to 21%. Key markets saw 2017 ended with mixed performance amid thin trading volume towards the end of the year. All three major US indices ended 2017 with the best annual gains since 2013. Nasdaq recorded the biggest yearly gain of 28.2% followed by Dow Jones and S&P500 which advanced by 25.1% and 19.4% each respectively. On the local front, FBMKLCI closed higher at 4.6% MoM and 9.5% YoY to 1796.8 points supported by yearend window dressing activities. Foreign investors turned net buyer in December with RM1.0 billion net inflows. For 2017, foreign investors were net buyers of RM10.3 billion versus net sellers of RM3.2 billion in 2016. Meanwhile Ringgit Malaysia appreciated 0.7% MoM and closed at RM4.05/USD as at end of 2017. The long-awaited tax reforms were finally passed after going through house and senate votes late December. UST yield curve flattened with the short dated 2T was seen well anchored near 1.90%, as players continued pricing in gradual rate hikes. The 2x10 spread narrowed substantially to 52 bps as at December 2017, from 126 bps a year ago. MYR bonds closed on firmer footing for the month of December, benefited from the MYR strength with suspected sustained foreign demand. While trade numbers were robust with exports and imports expanded by 18.9% and 20.9% y-o-y in October, inflation continued to ease for a second consecutive month to 3.4% in November, from 4.3% in September. However, economic data releases made little impact to the bond market and flows were mainly driven by portfolio rebalancing. At month-end closing, the 3-, 5-, 7- and 10-year benchmark MGS yields settled at 3.32% (-8 bps), 3.53% (-7 bps), 3.88% (-3 bps) and 3.91% (+2 bps) respectively. Trading activities for the benchmark local government bonds dipped as trading volume eased to RM27.9 billion, compared to RM58.7 billion the month prior, as most market players were away for the year-end holidays. Similarly, in the case of the secondary corporate bonds market, trading activities dipped compared to the previous month. During the month, total trading volume stood at RM7.9 billion compared to previous month’s RM15.6 billion. Mixed Assets Market Outlook Economic growth in Malaysia is forecasted to run at a decent pace of about 5.3%, albeit lower than the 5.8% expected for 2017. Drivers of growth should broaden into domestic demand, as strong exports, higher commodity prices and stronger Ringgit feed into the other sectors of the economy. Besides, the undemanding valuations of the Malaysian market against regional peers are likely to sustain foreign interest on top of stronger MYR and crude oil prices. The ongoing economic momentum, coupled with positive seasonality (January effect and pre-CNY rally) will likely result in a strong start in 2018. Expectations of GE14 should spur additional trading interest. We are positive and hence will maintain a relative high investment levels in the 1Q, but tactically scale back upon dissolution of parliament. Kenanga Investors Berhad (353563-P) Level 14, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur Tel: 03-2172 3000 Toll Free: 1800-88-3737 www.kenangainvestors.com.my 1 Strictly for Clients of Kenanga Investors Berhad
2. January 2018 Market Review and Outlook The Fed hiked rates by 25 bps to 1 .25-1.50% in December FOMC meeting as widely expected. On top of that, it raised the 2018 GDP projection to 2.2-2.6% from 2.0-2.3% done in September. However, dot-plot projection continued signalling three hikes in 2018. Mixed Assets Fund Strategy We reckon that MYR bonds will remain supported in the near term on foreign pent up demand on the back of stronger MYR. However, we think that mild selling pressure will eventually emerge heading into MPC meeting scheduled on 21 January amid rate hike anticipation, as it is not priced currently. Assuming global bonds particularly UST remaining stable in the near term, the hike is not expected to result in a major selloff. We believe that the central bank will not rush for a second hike given the erosion of inflationary pressures from peak in recent months. The ongoing economic momentum, coupled with positive seasonality (January effect and pre-CNY rally) will likely result in a strong start in 2018. Expectations of GE14 should spur additional trading interest. We are positive and hence will maintain a relative high investment levels in the 1Q, but tactically scale back upon dissolution of parliament. Stock picking remains key for outperformance. We favour construction, exporters which provide more value added or are naturally hedged by having USD raw material cost, consumer staples like F&B, banks and utilities. We remain selective on oil & gas and property. The Fund will continue to invest in a diversified portfolio consisting principally of fixed income securities and other permissible investments. Kenanga Investors Berhad (353563-P) Level 14, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur Tel: 03-2172 3000 Toll Free: 1800-88-3737 www.kenangainvestors.com.my 2 Strictly for Clients of Kenanga Investors Berhad
3. Kenanga Islamic Balanced Fund 3-year Fund Volatility January 2018 Low Lipper Analytics 15 Dec 2017 FUND PERFORMANCE (%) FUND OBJECTIVE Aims to achieve steady capital growth and income distribution (if any) over the medium to long-term period by investing in a diversified portfolio of authorised investments in accordance with Shariah requirements. % Cumulative Return, Launch to 31/12/2017 140 120 100 80 60 Fund Category/Type Balanced (Islamic) / Growth & Income 40 20 0 Launch Date 06 December 2004 Trustee CIMB Islamic Trustee Berhad Ken an g a Islamic Balanced : 123.55 Jun 17 Dec 17 Jun 16 Dec 16 Jun 15 Dec 15 Jun 14 Dec 14 Jun 13 Dec 13 Jun 12 Dec 12 Jun 11 Dec 11 Jun 10 Dec 10 Jun 09 Dec 09 Jun 08 Dec 08 Jun 07 Dec 07 Jun 06 Dec 06 Jun 05 Dec 05 Dec 04 -20 60% FTSE Bursa Malaysia Emas Sh ariah In dex an d 40% Mayban k 12-mo nth GIA Rate : 87.33 Source: Novagni Analytics and Advisory Sdn Bhd CUMULATIVE FUND PERFORMANCE (%) # Benchmark 60% FTSE Bursa Malaysia Emas Shariah Index and 40% Maybank 12-month GIA Rate Period 1 month 6 months 1 year 3 years 5 years Since Launch External Investment Manager / Designated Fund Manager Arieff Wahid Sales Charge Max 5.50% # Annual Management Fee 1.50% p.a. Fund 0.51 0.68 4.29 10.27 20.73 123.55 Benchmark 2.07 3.04 8.20 7.90 16.43 87.31 Redemption Charge Nil Period 2017 2016 2015 2014 2013 Fund 4.29 Benchmark 8.20 -0.77 6.56 -1.40 11.04 -2.95 2.74 -1.94 10.04 Source : Lipper , 31 December 2017 DISTRIBUTION HISTORY * Gross Distribution Date RM Yield (%) Unit Split 16-May-16 2.79 sen 6.62% 26-Feb-15 4.00 sen 8.71% 26-Feb-14 3.00 sen 6.27% - Annual Trustee Fee 0.05% p.a. CALENDAR YEAR FUND PERFORMANCE (%) # HISTORICAL FUND PRICE * Since Inception Date Highest RM 0.6885 11-Jan-08 Lowest RM 0.3841 12-Mar-09 FUND SIZE * RM 17.58 million NAV PER UNIT * RM 0.4134 All fees and charges payable to the Manager and the Trustee are subject to GST as may be imposed by the government or other authorities from time to time. ASSET ALLOCATION (% NAV) * 33.50% 30.10% 36.40% December November October CP / Sukuk / Others 1 2 3 4 5 SECTOR ALLOCATION (% NAV) * 23.40% 24.80% 36.80% 39.80% 32.00% Liquidity TOP EQUITY HOLDINGS (% NAV) * TENAGA NASIONAL BHD MALAYSIAN RESOURCES CORPORATION BHD DIALOG GROUP BHD IJM CORPORATION BHD KERJAYA PROSPEK GROUP BHD 43.20% Equity 3.91% 2.55% 1.94% 1.91% 1.85% Corporate Sukuk (Unsecured) Short Term Islamic Deposits and Cash Trading and Services Construction Industrial Products Properties Consumer Products Corporate Sukuk (Secured) Plantations Finance Others 1 2 3 4 5 31.4% 30.1% 12.7% 8.6% 4.3% 3.2% 2.4% 1.9% 1.5% 1.2% 2.7% TOP FIXED INCOME HOLDINGS (% NAV) * MUMTALAKAT IMTN 5.35% 30.04.2018 GOLDEN ASSETS INTERNATIONAL 4.7520180803 MEX II SDN BHD 5.6020260429 BGSM MANAGEMENT SDN BHD 5.4520240628 JATI CAKERAWALA 5.160 20230731 4.47% 3.65% 2.04% 2.01% 1.98% * Source: Kenanga Investors Berhad, 31 December 2017 Based on the fund’s portfolio returns as at 15 December 2017, the Volatility Factor (VF) for this fund is 5.08 and is classified as “Low”. (Source: Lipper). “Low” includes funds with VF that are above 1.870 and less than or equal to 6.225 (source: Lipper). The VF means there is a possibility for the fund in generating an upside return or downside return around this VF. The Volatility Class (VC) is assigned by Lipper based on quintile ranks of VF for qualified funds. VF is subject to monthly revision and VC will be revised every six months. The fund’s portfolio may have changed since this date and there is no guarantee that the fund will continue to have the same VF or VC in the future. Presently, only funds launched in the market for at least 36 months will display the VF and its VC. The Master Prospectus dated 30 June 2017 and the Supplemental Prospectus (if any), its Product Highlights Sheets (“PHS”) or Supplemental Disclosure Document (“SDD”) (if any) have been registered with the Securities Commission Malaysia, who takes no responsibility for its contents. A copy of the Master Prospectus, Supplemental Prospectus (if any), SDD (if any) and the PHS are obtainable at our offices. Application for Units can only be made on receipt of application form referred to in and accompanying the Master Prospectus and/or Supplemental Prospectus (if any), SDD (if any) and PHS. Investors are advised to read and understand the Master Prospectus, its PHS and any other relevant product disclosure documents involved before investing. Investors are also advised to consider the fees and charges before investing. Unit prices and distributions may go down as well as up. Where a unit split/distribution is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-unit split NAV/ex-distribution NAV. Where a unit split is declared, investors should note that the value of their investment in Malaysian Ringgit will remain unchanged after the distribution of the additional units. A Fund’s track record does not guarantee its future performance. Investors are advised to read and understand the contents of the unit trust loan financing risk disclosure statement before deciding to borrow to purchase units. “Cooling-Off Period” or “Cooling-Off Right” is not applicable to EPF Member Investment Scheme (EPF MIS). Kenanga Investors Berhad is committed to preventing Conflict of Interest between its various businesses and activities and between its clients/directors/shareholders and employees by having in place procedures and measures for identifying and properly managing any apparent, potential and perceived Conflict of Interest by making disclosures to Clients, where appropriate. The Manager wishes to highlight the specific risks of the Fund are stock specific risk, credit and default risk, interest rate risk, reclassification of Shariah status risk, currency risk and country risk.